Last week, CBAI member and ICBA leadership banker Greg Ohlendorf, President and CEO of First Community Bank and Trust in Beecher, and David Schroeder, CBAI Vice President of Federal Governmental Relations, met with Federal Reserve Bank of Chicago President and CEO Charlie Evans and other senior management to discuss a variety of issues important to Illinois community banks.

CBAI meets periodically with senior management of the Federal Reserve Bank of Chicago to review current issues and highlight the concerns and recommendations gleaned from discussions with community bankers. The wide-ranging topics included the importance of the dual banking system, the electronic delivery of loan files to streamline examinations, the impact of the prolonged low interest rate environment, shared examination responsibility with other regulators, and a lengthy discussion about the Financial Accounting Standards Board’s (FASB) Current Expected Credit Loss (CECL) model.

Ohlendorf told of his experience with the ICBA delegation at FASB’s final outreach meeting in February of 2016. He explained how, after several meetings and calls, FASB finally understood that community banks will require special consideration in the final accounting standard.

Schroeder emphasized CBAI’s work in Washington to inform the Illinois Congressional Delegation; the grass roots support of Illinois’ and the nation’s community bankers in outreach to FASB’s Chairman Russell Golden; and the United States House of Representatives letter signed by 62 bi-partisan members urging FASB to proceed with the utmost caution as CECL has the potential to “irreversibly damage” community banks.

Ohlendorf and Schroeder concluded that the combined efforts of community bankers, their associations dedicated to exclusively representing their interests, and the support of our elected officials were required to ‘move the needle’. These efforts resulted in not only a more favorable accounting statement but were also evident in the regulators’ Joint Statement on the New Accounting Standard. Ohlendorf identified a dozen references in the Joint Statement where there were concessions and accommodations, clear nods to our advocacy efforts, and a willingness to implement the new model “especially mindful” of community banks.

Schroeder stated that even in its current form FASB’s CECL is not optimal for community banks but is far better than previously proposed versions. The important work now will be to monitor the implementation of CECL by the regulators to assure they are fulfilling the obligations in their Joint Statement and to find other opportunities for improvement. Ohlendorf and Schroeder held out this cooperative effort as an example of what can and needs to be done going forward in regulatory rulemaking to further tier regulations for community banks. CBAI appreciated the opportunity to meet with the Chicago Fed and welcomes their understanding and support for Illinois community banks.